Unlike most Canadians who are not operating a business, many professionals have more options to them when it comes to retirement savings. The average Canadians employed by companies in the private sector will typically use the Registered Retirement Savings Plan or the Tax–Free Savings Account. The lucky few work for organizations that sponsor a registered pension plan, but their numbers seem to be declining every year as a percentage of the workforce not working in para–public employment.
The three popular articles this week on HRinfodesk deal with: A matter where the court had to determine the enforceability of a promoted employee’s new employment contract, particularly the termination clause; current and 2017 payroll rates; and PRPP legislation that is now in force in Ontario.
Pension plans can be a very helpful retention mechanism for good employees (and, it must be noted, bad ones too), and many larger employers offer them to their employees as part of their overall compensation package. However, the cost and complexity of pension plans have also meant that they may not be considered by most smaller employers. Recent legislative enactments have attempted to address this.
DB pension plans and Ontario’s consultation on solvency funding rules – Now is the opportunity for employers to speak up
Employers that sponsor defined benefit (“DB”) pension plans know that contribution requirements can be volatile and onerous, especially given current low interest rates. The Ontario Government has taken note. In its recent consultation paper, the Government proposes several approaches to change the current DB funding rules, including the complete elimination of solvency funding. Comments on the Consultation Paper are due by September 30, 2016. The Ontario Government then intends to hold a second public consultation on any proposed funding reforms in the Fall 2016.
All employment relationships in Ontario are deemed to be contractual, whether or not a written contract is in place between the parties. When there is no written contract, the common law (judge-made law) imports a number of obligations into the contract that will bind the employer and the employee.
A number of financial institutions and other providers are now offering pooled registered pension plans (PRPPs) and voluntary registered savings plans (VRSPs), the PRPP’s Quebec equivalent. Except for VRSPs, which are mandatory for employers who don’t offer pension plans or other retirement savings plans such as group registered retirement savings plans (RRSPs), how popular are PRPPs likely to be?
As anticipated, since the federal Pooled Registered Pension Plans Act came into force December 14, 2012, several provinces have followed suit and tabled legislation to implement the new kind of portable deferred income plan, which is designed to provide retirement income to workers and self-employed persons who do not have access to an employer-sponsored retirement pension plan.
Pension funding rule changes announced on February 13, 2013, will protect jobs and preserve benefits for thousands of private-sector workers, according to the Government of Nova Scotia.
The Supreme Court of Canada has agreed to hear the Indalex Limited case, which will determine if underfunded pension plans should be treated as a priority when it comes time to liquidate the assets of a bankrupt company.